The Zacks Analyst Blog Highlights: Aflac, Novatel Wireless, Verizon
Communication, AT&T and Sprint Nextel
CHICAGO, May 9, 2013
CHICAGO, May 9, 2013 /PRNewswire/ -- Zacks.com announces the list of stocks
featured in the Analyst Blog. Every day the Zacks Equity Research analysts
discuss the latest news and events impacting stocks and the financial markets.
Stocks recently featured in the blog include Aflac Inc. (NYSE:AFL), Novatel
Wireless Inc. (Nasdaq:NVTL), Verizon Communication Inc. (NYSE:VZ), AT&T, Inc.
(NYSE:T) and Sprint Nextel Corp. (NYSE:S).
Get the most recent insight from Zacks Equity Research with the free Profit
from the Pros newsletter: http://at.zacks.com/?id=5513
Here are highlights from Wednesday's Analyst Blog:
Aflac Slips to Underperform
We have downgraded life and health insurer – Aflac Inc. (NYSE:AFL) to
Underperform based on its faltering financial growth outlook.
Why the Downgrade?
Estimates for Aflac have witnessed a steady decline since its first-quarter
2013 results on Apr 24. The company's first-quarter earnings per share of
$1.69 comfortably surpassed the Zacks Consensus Estimate of $1.62, but lagged
the year-ago quarter's earnings of $1.74. Meanwhile, total revenue of $6.21
billion missed the Zacks Consensus Estimate of $6.27 billion but inched up
0.5% on a year-over-year basis.
Following a tempered growth outlook, the Zacks Consensus Estimate for 2013 has
gone down 2.7% to $6.17 per share in the last 30 days. The Zacks Consensus
Estimate for 2014 also slid 4.2% to $6.54 per share. With the Zacks Consensus
Estimates for both 2013 and 2014 going down, the company now has a Zacks Rank
Cause for Concern
Aflac's top line remains sufficiently exposed to a challenging operating
environment, particularly in Japan. Sales from its banks channel, WAYS life
policies and other third sector cancer and medical products (together
contributing about 75% to Japan's top line) decelerated in the first quarter
Management's expectation of third sector revenue growth in Japan in the band
of nil to 5% in 2013 further validates the lackluster results ahead. Despite
the re-pricing initiatives taken in Apr 2013, Aflac projects a 40–60% decline
in the WAYS sales in the upcoming quarters, after over 124% growth in 2012.
This will severely weigh on the financials of the company.
On the other hand, Aflac's U.S. operations are yet to gain traction given the
deteriorated new annualized sales on the back of intense competition, low
demand and reduced client activity from larger businesses. Management projects
new annualized sales in the U.S. to witness sluggish growth of nil to 5% in
2013, driven by difficult comps.
Moreover, the company's investment portfolio comprises about 43% in Japanese
government bonds, which is being adversely impacted by the historically low
interest-rate environment. The past few quarters have witnessed significant
weakness in yen as well, indicating deterioration in the upcoming quarters.
Increasing expenses, lower investment yield and low rate environment have
further impelled management to peg its earnings growth guidance at low- to
mid-single digit in 2013.
Novatel Drives MiFi Usage
Novatel Wireless Inc. (Nasdaq:NVTL) – one of the leading manufacturers of
wireless data modems – launched SA 2100, a superior higher frequency
MiFi-based M2M device which will connect various M2M vertical markets.
The launch of the new SA 2100 technology will ease the usage of M2M
applications across vertical markets as the new device will be integrated with
The new device will be of immense help to various M2M vertical markets which
includes M2M Fixed Telemetry, M2M Fleet Management and Asset Tracking and
Connected car. By using SA 2100 in cars as a hotspot, the user can easily
connect multiple devices through a Wi-Fi platform.
Likewise, the usage of SA 2100 device for M2M Fleet Management and Asset
Tracking will also benefit the user to easily track the fleet through advanced
GPS tracker. While in case of M2M Fixed Telemetry, the new device will connect
Ethernet-powered or Wi-Fi-based devices to lightning fast Internet by 4G LTE
Novatel is one of the leading brands to offer MiFi devices to its customers.
The company already supplies its LTE-based MiFi devices to the top three
carriers in the U.S., namely, Verizon Communication Inc. (NYSE:VZ), AT&T, Inc.
(NYSE:T) and Sprint Nextel Corp. (NYSE:S).
However, the company is facing stiff competition from the low-cost Asian
manufacturers, including ZTE and Huawei Technologies. Moreover, in recent
times, most smartphones have inbuilt hotspot facilities, thus completely
bypassing the need for any MiFi modem.
In order to boost its top line, the company is continuously upgrading its
software and launching innovative devices in an attempt to drive the Mi-Fi
Currently, Novatel Wireless has a Zacks Rank #3 (Hold).
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